Credit Card Statement Balance vs Current Balance: What’s the Difference

Updated on: 14 Dec 2021 // 25 min read // Credit Cards
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Whether you’ve been using SBI Credit Cards or others, you must have a thorough knowledge of the various concepts related to Credit Cards to maximize the benefits you can avail from them. As a first-time credit card user, it is natural to have some doubts regarding the concepts of charges, balance, and monthly statement related to your Credit Card.

Credit cardholders receive their Credit Card statement from the issuing bank every month, with detailed information about the transactions and purchases they have made and the money that has to be paid by the due date.

While checking Credit Card Balance on the net banking application or website, one of the major points of confusion for many first time users is the two different types of balances displayed; statement balance and current balance. This can be confusing when you’re trying to pay the total amount to avoid any charges.

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Difference between Credit Card Statement Balance and Current Balance

The statement balance is the amount you owe to the bank against your Credit Card usage as per the latest billing cycle. This amount includes charges and transactions until the date; the statement was generated.On the other hand, the current balance refers to all the unpaid transactions made by you until the date of enquiry, including retail finance charges.

Banks bill the amount that has to be paid by the credit card holder according to a particular cycle. When the billing cycle ends, a Credit Card statement is generated by the bank with details of the transactions and purchases made on the card. The purchases, payments or any other transactions made after the statement has been generated, reflect under the current balance section. This is because of the change in the outstanding balance hastaken place after the monthly statement has been generated.

Depending on the transactions you’ve made, your current balance could be higher or lower than your statement balance. This is common if you use your Credit Card for day-to-day activities. For example: If you have made any payments for your HSBC Credit Card after the credit card statement was generated, then your statement balance will be higher than your current balance. In the same way, if you’ve made any transaction or purchases since the credit card statement was generated, then your statement balance will be lower than your current balance. The current balance also displays any unbilled/ pending transactions, i.e., any transaction you’ve made in the past 24-48 hours that haven’t been billed on your Credit Card yet, but the bank/ Credit Card provider has received the information about the transactions. This happens when the transactions haven’t been completely processed.

Which Balance should be paid to avoid Interest Charges?

Here are some useful tips that you can follow to avoid interest and other dues payable against your Credit Cards: –

  • It is advisable to start the billing cycle with a zero balance, which means to pay the balance amount in full before the due date for the previous billing cycle to enjoy the benefits of interest-free credit period offered by the bank or the issuing company.
  • The statement balance might already have the interest amount charged in case you have any balance carried forward from the previous billing cycle. If that is not the case, you need not worry about the interest on the statement balance until the grace period of your Credit Card.
  • You can set up auto-debit with the bank/card provider from your Savings Bank account to ensure that the statement balance is paid on time. The payment will be automatically debited from the source account on the date specified by you, i.e., on or before the due date.
  • An important thing to keep in mind, when you set up auto-debit for your Credit Card is to maintain the required funds in the source account from which the payment will be debited.
  • If you fail to ensure that, your banker will reject the payment as your Savings Account does not have the adequate balance, resulting in late payment charges, plus interest charged on the statement balance as it was not paid in full before the due date.
  • Unpaid card balance can have a negative impact on your credit score and would act as a thorn in the flesh if you wish to avail a loan in the near future.

How the statement balance and current balance can impact your credit score?

You will be left with an outstanding balance on your Credit Card after paying the statement balance if your current balance is higher than that amount. The remaining balance and new transactions will be reflected in your next billing statement. However, if you are concerned about your Credit Score and wish to pay the entire amount, i.e., the current balance, you can contact your bank/ card provider and make the payment accordingly. This is often termed as “payoff balance” which includes the transactions and charges that haven’t been charged on your Credit Card yet.

Your statement balance and current balance might impact your Credit Score, depending upon your Credit Card provider. Credit Card providers send a report on their customer’s outstanding debt to the Credit Rating bureau periodically. The Credit Bureau then revises your credit score, based on the information shared by the Credit Card company.

It is recommended to pay at least the minimum amount as per the Credit Card statement if you are not able to pay the entire outstanding amount to avoid any late payment charges.Additionally, you must make all attempts to reduce your Credit Card balance faster and avoid the interest charges as much as possible.

If you are still confused about paying either the statement balance or current balance,then it is recommended to make the payments for the total statement balance before the due date to avoid any interest charges and late fees. However, if you wish to pay the entire current balance to make it NIL, it is a personal choice. In both cases, you will avoid interest charges, late fee, and boost your credit score with every card payment.

However, in any given situation where you are unable to make the full payments on statement balance during a billing cycle, it is recommended to pay the minimum amount due before the last date to avoid any penalty or late payment charges.

Also Read: How to Get Out of Credit Card Debt? A Complete Guide

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